RealNetworks to Offer Streaming Media to Mobile Users

Its software will deliver video and audio to digital devices, but usage fees could be costly.

Seeking to transform cellular phones and personal digital assistants into lucrative multimedia jukeboxes, RealNetworks Inc. and several media companies today will launch a service for streaming news, sports and entertainment to mobile users.

The new service from the Seattle-based software developer will deliver video and audio programming from Capitol Records, CNET Radio Direct, FoxSports.com, National Public Radio and others to subscribers on digital networks operated by AT&T Wireless Services Inc., Cingular Wireless and T-Mobile USA Inc.

Subscribers won't pay a monthly fee to access the content. But they will need a special mobile phone or a Pocket PC hand-held device equipped with RealNetworks software, and they'll be charged normal usage fees to download digital data. With streaming, the content is downloaded as it plays.

The cost of downloading data varies by wireless carrier but can range from 5 cents to 40 cents a kilobyte, according to company price lists. Unless subscribers sign up for an unlimited data plan, they could be in for severe sticker shock: A single digital song can be as large as one megabyte and could cost as much as $400.

"That stuff eats up a lot of capacity," said Patrick Comack, a telecommunications analyst at Miami-based investment firm Guzman & Co. "I think that the service would have to be pretty amazing for people to pay a premium."

The RealNetworks venture is the latest attempt by the wireless industry and content providers to transplant the PC experience to the wireless environment. Marketers have long insisted that consumers and business executives on the move are hungering for entertainment and information services to pass the time during workday commutes and long-distance travel.

In recent months, the nation's six major wireless carriers have teamed with content providers to roll out scores of new data services, such as camera functions and video games, to the nation's 141 million cell phone subscribers. Fueling the movement to data is an intense price war that has driven dialing costs so low that it's often cheaper to make a long-distance call on a wireless phone than a traditional land line.

Over the years, RealNetworks has refined its multimedia software to enable users of personal computers and other electronic devices to receive digital audio and video. The company's bread-and-butter RealOne players are downloaded 200,000 times a day and are responsible for playing more than three-quarters of all streaming content on the Internet, according to the company. Now it is turning its attention to the fast-growing wireless industry.

Dan Sheeran, vice president of marketing for RealNetworks, said he shares analysts' concerns that costly data fees might damp enthusiasm for the new service. But he is convinced people will sample it and that over time, it will gain a following among mainstream users.

"We think a lot of people will try it out," he said.

Unlike other data services, which require a lot of attention to a cell phone's keypad or screen, Sheeran said that listening to streaming audio will be relatively painless.

"Except for the minute it takes to start up the audio stream, you don't need to be looking at the phone screen," he said. "Once it's set up, you can spend the rest of the day listening to news and entertainment."

Consumers already have shown a willingness to do more with their phones than just talk.

About 22.5 million mobile phone subscribers said they used their phones to connect to the Internet last year, up from 9 million in 2001, according to the New York-based research firm EMarketer Inc. Many say they have been enticed to experiment by the fancy color screens and improved Web browsers available on the latest cell phones.

"I don't know what the technology winner is going to be -- whether it's the Sony Walkman or something else -- but if you are a busy professional and you want to catch the news from a source you trust, I think we have an interesting product," said Maria Thomas, a vice president and general manager of news at National Public Radio.

Some experts say the future of the RealNetworks venture will depend on consumer response to a collection of fancy phones now hitting the market that will contain the RealNetworks software.

Among the new devices is the Nokia 3650, a mobile video phone that sports an oversized color screen embedded in an unorthodox handset design. The keys on the Nokia phone are arranged in a semicircle instead of the grid seen on most traditional handsets. That gives the phone much more space for viewing videos, but it could be a turnoff to business executives, who are the biggest users of data services and tend to favor more conservative phone designs.